Correlation Between Boeing and ALLSTATE

Can any of the company-specific risk be diversified away by investing in both Boeing and ALLSTATE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Boeing and ALLSTATE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Boeing and ALLSTATE P 555, you can compare the effects of market volatilities on Boeing and ALLSTATE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Boeing with a short position of ALLSTATE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and ALLSTATE.

Diversification Opportunities for Boeing and ALLSTATE

-0.02

Correlation Coefficient

Boeing  ALLSTATE

Good diversification

The 3 months correlation between Boeing and ALLSTATE is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and ALLSTATE P 555 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLSTATE P 555 and Boeing is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Boeing are associated (or correlated) with ALLSTATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLSTATE P 555 has no effect on the direction of Boeing i.e., Boeing and ALLSTATE go up and down completely randomly.

Pair Corralation between Boeing and ALLSTATE

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.21 times more return on investment than ALLSTATE. However, Boeing is 2.21 times more volatile than ALLSTATE P 555. It trades about 0.09 of its potential returns per unit of risk. ALLSTATE P 555 is currently generating about -0.07 per unit of risk. If you would invest  15,500  in The Boeing on October 4, 2024 and sell it today you would earn a total of  1,687  from holding The Boeing or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.1%
Values	Daily Returns

The Boeing  vs.  ALLSTATE P 555

Boeing

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ALLSTATE P 555

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALLSTATE P 555 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALLSTATE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boeing and ALLSTATE

The main advantage of trading using opposite Boeing and ALLSTATE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, ALLSTATE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ALLSTATE will offset losses from the drop in ALLSTATE's long position.

The idea behind The Boeing and ALLSTATE P 555 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.